this Sec 174 is like your own mother forcing you to pay rent for all 9 months that you were in her tummy developing and also you have to pay for food she gave you plus usage of the umbilical cord. then when you are born she increases the rent and charges you for depreciation on her life. this is outright crazy and morally destructive for inventors.
the tax writers knew exactly what they were doing in 2017 when they put this in place. They needed something to make make the TCJA look like wasn't going to create a huge deficit. To make that math work, they picked 174. It was never intended to go into place but failure by congress allowed it to go into effect.
SECTION 174 is anti constititoional because it goes against article 1 section8 clause 8 of the U.S. constition. : [The Congress shall have Power . . . ] To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries. Inventors can't benefit from this clause because most of us wont be able to reach it due to Section 174.
I had planned to develop and release a couple of new software applications this year. Becoming aware of Section 174 put the brakes on that idea. I now have three options for moving forward: 1) pitch to angel investors and have them carry the losses without proof that the concept is a viable product (highly unlikely); 2) form a non-profit organization and either give the software away as a gift to new members of the association (a tough sell and unlikely to succeed); or 3) publish the software as a "freemium" product and beg for donations (which are treated as gifts under the tax law, but also a path that few have been successful with).
@@gaiustacitus4242 this is sad. as a non for profit you can still sell the software. .... 174 seems like something a foreign nation would do to attack the u.s. 174 reminds me of when the body starts to attack its own immune system or vise verse. I'm very sad about reading the troubles you are experiencing because of this 174 thing. Im going to write a paper asking for an exception for lone inventors who don't have a revenue coming in that is over 1 millions dollars. i cant get funding and every program I ask for help from rejects or ignores me. I can only make my inventions by being self funded kind of like how you explained. Im struggling to be an inventor and now this will erase my ability to invent. micro Independant lone inventors need a special exemption from this madness.
Ya I don't think there is anybody really benefitting from this, thats why both sides of the aisle want to fix it they just can't get out of there own way to do it
The changes to Section 174 were implemented to prevent the widespread tax fraud that had been on-going for years. The root of the problem that Congress sought to solve is two-fold: first, some R&D efforts produce works which have many years of value (especially works eligible for protection under patent or copyright law) and which should be treated as assets, and second, both the company sponsoring the R&D and the company performing the R&D were claiming R&D tax credits even though only one was eligible. The problem stemming from the treatment of R&D output as an asset is that the IRS lacks the domain knowledge to determine if the R&D expenditures produced nothing of value or the resulting work no longer has any remaining market value. Under both cases the R&D expenditures should be written off as a total loss for the tax year in which the determination was made. This led to changes in the Internal Revenue Code requiring all R&D expenditures to be amortized over the useful life of the work, which for most assets is 5 years.
This was an amendment to a tax cut bill. I wonder who got 174 squeezed in?
this Sec 174 is like your own mother forcing you to pay rent for all 9 months that you were in her tummy developing and also you have to pay for food she gave you plus usage of the umbilical cord. then when you are born she increases the rent and charges you for depreciation on her life. this is outright crazy and morally destructive for inventors.
the tax writers knew exactly what they were doing in 2017 when they put this in place. They needed something to make make the TCJA look like wasn't going to create a huge deficit. To make that math work, they picked 174. It was never intended to go into place but failure by congress allowed it to go into effect.
ya definitely seems like the case, there is a bill that is supposedly moving through congress right now to fix it but not holding my breath!
This was an amendment to a tax cut bill. I wonder who got 174 squeezed in?
This is insane! Just created my company in the US, now I'm considering starting up somewhere else.
SECTION 174 is anti constititoional because it goes against article 1 section8 clause 8 of the U.S. constition. : [The Congress shall have Power . . . ] To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries. Inventors can't benefit from this clause because most of us wont be able to reach it due to Section 174.
I had planned to develop and release a couple of new software applications this year. Becoming aware of Section 174 put the brakes on that idea. I now have three options for moving forward:
1) pitch to angel investors and have them carry the losses without proof that the concept is a viable product (highly unlikely);
2) form a non-profit organization and either give the software away as a gift to new members of the association (a tough sell and unlikely to succeed); or
3) publish the software as a "freemium" product and beg for donations (which are treated as gifts under the tax law, but also a path that few have been successful with).
@@gaiustacitus4242 this is sad. as a non for profit you can still sell the software. .... 174 seems like something a foreign nation would do to attack the u.s. 174 reminds me of when the body starts to attack its own immune system or vise verse. I'm very sad about reading the troubles you are experiencing because of this 174 thing. Im going to write a paper asking for an exception for lone inventors who don't have a revenue coming in that is over 1 millions dollars. i cant get funding and every program I ask for help from rejects or ignores me. I can only make my inventions by being self funded kind of like how you explained. Im struggling to be an inventor and now this will erase my ability to invent. micro Independant lone inventors need a special exemption from this madness.
Land of the free, am I right? Can you elaborate on who benefits from this and how?
The firm that does your taxes, that too only for the short term.
Ya I don't think there is anybody really benefitting from this, thats why both sides of the aisle want to fix it they just can't get out of there own way to do it
The changes to Section 174 were implemented to prevent the widespread tax fraud that had been on-going for years. The root of the problem that Congress sought to solve is two-fold: first, some R&D efforts produce works which have many years of value (especially works eligible for protection under patent or copyright law) and which should be treated as assets, and second, both the company sponsoring the R&D and the company performing the R&D were claiming R&D tax credits even though only one was eligible.
The problem stemming from the treatment of R&D output as an asset is that the IRS lacks the domain knowledge to determine if the R&D expenditures produced nothing of value or the resulting work no longer has any remaining market value. Under both cases the R&D expenditures should be written off as a total loss for the tax year in which the determination was made. This led to changes in the Internal Revenue Code requiring all R&D expenditures to be amortized over the useful life of the work, which for most assets is 5 years.